Inside Romney's fuzzy energy jobs math

FORTUNE — With this election’s sharp focus on jobs and the economy, both candidates are trying to show they can marry the goals of energy independence with employment and national economic growth.

Governor Mitt Romney says he will create more than 3 million jobs by easing restrictions on natural resource development and giving control of federal lands over to the states. Accusing President Obama of lagging in domestic fossil fuel production, Romney has painted himself as the candidate of oil, gas, and coal. The Republican presidential candidate has received almost $3 million in campaign contributions (not including donations to PACs and the RNC) from these industries, according to OpenSecrets.org. That’s more than seven times the amount President Obama has brought in from these groups. But, so far, there is little evidence that the Republican candidate’s platform will lead to more energy jobs.

The Romney campaign’s energy job growth projections are primarily based on a March 2012 report from Citigroup that details the potential growth in domestic oil and gas production and the impact such growth would have on the economy as a whole. The report estimates that increased domestic oil and natural gas production could create more than 3.6 million jobs by 2020.

These estimates, however, do not depend on loosening regulations or handing over control of federal lands to the states, the only energy policy prescriptions that the Romney campaign has offered so far. In fact, Citigroup’s projections assume that the U.S. would keep its current energy policies, according to Ed Morse, managing director and head of global commodities research at Citigroup Global Markets and the report’s lead writer.

In fact, Citigroup’s report refers to current energy regulations as “benevolent” and describes them as a necessary factor in maintaining the stability of the markets. “Federal regulation is better than state regulation,” Morse says. Handing control over to the states, he says, “would more likely have a negative impact” on job growth.

Under state regulation, for example, the Keystone XL Pipeline — a project that has Romney’s support — would not likely ever get built. “If the state of Nebraska were allowed to vote on whether the Keystone XL Pipeline were to be built in Nebraska, it probably would not happen,” Morse says. And on dialing back federal regulations, Morse says, “I don’t see how you can sanely develop resources that are inherently dirty without having government regulation to make sure that the tradeoffs between risks and potential new productions are managed.”

Romney campaign spokesperson Ryan Williams disputes Morse’s conclusions, saying, “U.S. public policy is the single most important determinant” of whether the country will supply the millions of promised jobs.

Morse is quick to point out that the Obama Administration has drilled more wells than any other president since Ronald Reagan and plans only to drill more. Domestic oil production has increased every year of Obama’s term and the president has laid out plans to continue that course. Those plans include opening more than 75% of untapped resources in the Gulf of Mexico and Alaskan coast to drilling and instituting reforms that actually punish oil and gas companies with idle leases.

While the Romney energy platform calls for continued coal production, Citigroup’s projections see coal as playing an increasingly diminished role in American energy. The report expects many coal-powered technologies to make a transition to gas, and relies on “the forced retirement of coal-fired plants” to eventually push the last coal holdouts into gas use.

Indeed, coal’s demise is considered a given by many in the energy industry, with natural gas offering a cleaner, cheaper alternative. “Where are you seeing new coal in this country? You’re not seeing new coal,” says Ron Pernick, founder and managing director of energy research firm Clean Edge and author of Clean Tech Nation. Coal mining is also environmentally destructive, dangerous to its workers in the short term, and unhealthy in the long term.

For his part, Obama offers coal — which directly employs around 136,000 people, according to the National Mining Association — a second chance with a $3.4 billion investment in carbon sequestration (the capture and storage of carbon dioxide to reduce negative environmental effects) and other “clean coal” technology, but whether that is throwing good money after bad — or simply a politically motivated promise — is up for debate.

The Citigroup report’s job growth predictions include 785,000 additional jobs based on the idea that increased energy efficiency will reduce energy consumption and give consumers more disposable income, stimulating a wave of economic growth. Romney has repeatedly objected to efficiency mandates. In a statement released after the President’s new fuel efficiency standards were announced, Romney called the standards “extreme” and said any savings “will be wiped out by having to pay thousands of dollars more upfront for unproven technology that [customers] may not even want.” The Romney campaign has voiced its opposition to other government support for clean energy, including the wind industry production tax credit, which is set to expire at the end of the year. A report by Navigant Consulting found the expiration would cut the wind industry in half, costing approximately 37,000 jobs.

No matter who wins in November, we are likely to see more jobs from domestic fossil fuel production over the next four years. How many jobs we’ll see will partly depend on how the government plans to get involved.

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